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Volume 27, Issue 4

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October 30, 2007

Recovery Planning Can Speed Return to Business

Written by  Ms. Michael C. Redmond
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It is human nature to think we won't be hit by a disaster, whether at home or at work. But in the last two years a seemingly endless procession of fires, floods, hurricanes and bombings - and billions of dollars in damages - have proven otherwise.

A written and tested disaster recovery program can determine whether or not your business fully resumes operations after a catastrophe. A sound program is actually a collection of specific action plans:

  • a disaster avoidance plan to reduce or limit risks
  • an emergency plan to ensure quick response to a disaster
  • a recovery plan to guide the firm in resuming vital business functions
  • a business continuation plan to fully restore all business activities to normal

Disaster avoidance is the cornerstone of any business continuation plan. The first step in creating an avoidance plan is to analyze the potential hazards and how well you are protected against them.

Even the best avoidance plan cannot prevent every disaster. When a serious incident occurs, you must have an emergency response plan. After ensuring human safety for employees, visitors and the public, what will you address first? (Plan to conduct public relations and advertising programs to let your clients know you are still in business and where they can reach you).

When the immediate response to the emergency is completed, it is time to focus on your long-term survival. You need a comprehensive recovery plan ready to implement. This plan should contain the specific steps for recovering critical business functions and restoring your business to pre-disaster conditions.

The scope of the disaster will also have an impact on your recovery. Regional disasters could affect others you do business with including clients, vendors or emergency personnel. Your plan should consider the possibility of competing for resources.

Testing and duplicating your disaster recovery program is critical. For instance, you may find that your employees don't know where key emergency supplies are stored. Or the client contact list may not be current, meaning that the address of your new, important clients is unavailable. The best way to identify unforeseen difficulties is to conduct regular drills under normal conditions.

Finally, finding your disaster recovery program is as important as mapping out your actions. The expense of recovering from a catastrophe can be devastating if unplanned.

Reviewing your insurance coverage now can help avoid cash flow problems later. In addition to ensuring that you have appropriate coverage, check into your insurance carrier claim-paying practices. Some companies pay expenses up-front, others pay a percentage. Your insurer's claim philosophy should provide funds to reimburse you for immediate expenses.

Developing a comprehensive disaster recovery program takes foresight and commitment. But if catastrophe strikes, an effective recovery program will provide a smooth, speedy return to business instead of diminished customer confidence, loss of clients and ultimately, failure. Leave the latter option for your competitors.

Mitigating Your Losses
Procedures:

  • Create an avoidance plan
  • Develop emergency response plan
  • Prepare a comprehensive disaster recovery plan
  • Test and update your plans
  • Fund the disaster recovery process
  • Review your insurance coverage

Procedure Detail

Create an Avoidance Plan

  • Analyze hazards
  • Determine how well the company is protected from them
  • Plan should cover most important details to protect assets
    - Fire protection systems
    - Building codes
    - Security measures
    - Adjacent properties (hazardous activities)
    - Geographic locations
    - Computer power and security vulnerability
    - Networks

Develop Emergency Response Plan

  • Ensure all aspects for human safety
  • Tasks to mitigate damage,
    i.e.: computer in a fire situation
    Disconnect equipment
    Increase ventilation
    Reduce humidity
    Relocate equipment to a clean area
    Recover computer operations (hotsite, etc)
    i.e.: Water damage
    Disconnect equipment
    Remove water from the area
    Call restoration firm which you contracted prior
    i.e.: Vital records
    Back up and keep offsite prior to an emergency
    Singed and water soaked paper restoration vendors

Prepare a Comprehensive Disaster Recovery Plan

  • Conduct risk & business impact analysis
    Overview of business objectives
    Operating Procedures
    Supporting Resources
  • Strategic Planning
    Series of options, with costs and activation times
    Internal and commercially available strategies
    Strategies to recover critical business functions
    Restoration of supporting resources if interrupted
  • Plan documentation
  • Organize recovery teams
  • Document procedures to implement recovery capabilities

Test and Update Your Plan

  • Testing, training and maintenance
  • Exercise recovery capability
  • Familiarize employees with procedures
  • Test the plan

Fund the Disaster Recovery Process

  • Review costs identified for first day, first week, etc.
  • Prepare emergency line of credit ahead of time

Review Your Insurance Coverage

  • Review insurance coverage
  • Check into insurance carriers claim paying practices
  • Up front payments
  • Percentage of cost
  • Discuss immediate expenses with carriers


Ms. Michael C. Redmond is a senior consultant with Chubb Services Corp., Richard P. Luongo is Vice President of DRP for Chubb Services Corp., and Joel F. Tietz is an Assistant Vice President of DRP for Chubb Services Corp.

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